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The whole 'pay yourself first' thing keeps getting twisted

I feel like every personal finance blog and YouTube channel hammers on paying yourself first, but I keep seeing people treating it like it means just putting money into savings after bills and then spending whatever is left. That's not really it, right? I mean, I work the register at a hardware store so I see a lot of folks come through who mention they're trying to follow that advice, but they end up with nothing left by the 20th of the month. Last month a guy told me he puts $50 into a separate account each paycheck but then pulls it right back out for gas or lunch because he forgot to budget for those things. The way I understood it, paying yourself first means automating that savings so it hits a different bank or a separate account that you don't even look at for daily stuff. Has anyone else had to explain this to a friend or family member who kept missing the point?

2 comments

2 Comments

noahpark4d agoTop Commenter

Oh man, you hit it right on the head. People totally miss the point because they make it too easy to undo. If your savings account is at the same bank and you can transfer money back in two clicks, you're just fooling yourself. The real trick is to put that money somewhere you can't touch without serious effort, like a different bank with no debit card attached. I've told a couple buddies this and they still complained about running out of cash for beer, so I just shrug now. You can lead a horse to water but you can't make it save, I guess.

jason_kelly81d ago

Hard disagree. Making savings too hard to access just means you'll rely on credit cards when something actually comes up, which is way worse than dipping into savings. Having to drive across town or wait three business days to get money back might sound smart until your car breaks down and you're paying 20% interest on a repair bill instead.